New step towards cryptocurrency data exchange

The fight against tax evasion and fraud involving cryptocurrencies seems to intensify. The Organization for Economic Co-operation and Development (OECD) has developed a framework for the automatic international exchange of cryptocurrency data. The tax authorities will thus be able to have access to information concerning Belgians who have invested in cryptocurrencies and who are seeking to make a taxable capital gain.

The tax authorities may have access to information on Belgians who have invested in cryptocurrencies and who are seeking to make a taxable capital gain.

The new system has been referred to as the Crypto-Asset Reporting Framework – CARF) and operates under the principles of the Common Reporting Standard (CRS) for the automatic exchange of financial account information between tax authorities.

This standard applies internationally and even Switzerland, Luxembourg, Liechtenstein and Hong Kong exchange bank account information.

Data exchange

A public consultation on the CARF runs from March 22 to April 29. There is no timeline for final approval. “The OECD initiative is a very important development“, underlines Gertjan Verachtert, tax lawyer at Sansen International. “Data exchange is not limited to European platforms cryptocurrency exchange such as the Luxembourgish Bitstamp. She can have a global impactwhich means that major trading platforms such as the American Coinbase and Kraken are also targeted.

“If the legislation is successful, trading platforms will have to retain the KYC data they must (should) collect for tax purposes and ultimately share it with tax authorities around the world,” he adds.

KYC or “Know Your Customer” is regulations that require banks to know their customers and where their money comes from.

“Trading platforms will have to maybe swap every year informations on the salesthem depositsthem withdrawals and the income of crypto-currencies”, explains Gertjan Verachtert.

“The OECD seems to be aware that many cryptocurrencies are not stored with trading venues, but privately in ‘wallets’. It is suggested that trading platforms also share information when cryptos are transferred to these wallets.

Assistance Directive

Other initiatives have already been taken to curb tax evasion and evasion involving cryptocurrencies. At European level, an extension of the Support Directive to cryptocurrencies and electronic money – called in the jargon DAC 8 – is in preparation. The public consultation started in March last year and has since ended. But the Commission has not yet submitted a proposal.

At the beginning of this year, a bill has been approved at Belgian level allowing the financial authority FSMA to oversee private cryptographic key custody wallet service providers (“wallet providers”) and providers of exchange services between virtual currencies and legal currencies established in Belgium.

Tax system

Data exchange says nothing about the taxability of capital gains, but it increases the risk of controls“says Gertjan Verachtert.

Whether capital gains on cryptocurrencies are taxable in our country depends on the concrete situation.

Whether the added value is part of the normal management of your private assets as a “good father” would do, it is in principle not taxed. But speculators, that is to say, those who take high risks by anticipating violent price fluctuations, risk being taxed at the rate of 33% as miscellaneous income.

Cryptocurrencies: all about the tax and legal aspect

Since March 30, 2022, the tax administration has been offering an update to its documentary folder “Cryptocurrencies“. “With the recent international events that we are experiencing, cryptocurrency is back in the spotlight“, explains the FPS Finances. “It is even considered by many buyers as a safe haven in these times of crisis. Uniform (European) legislation and monitoring are becoming more than necessary to regulate their use and fight against crime linked to cryptocurrencies.”

In this folder, you will find an update of legal and tax information available on cryptocurrencies. Answers are provided from legislation already in force, as well as pending legislation, advance rulings, parliamentary questions and official notices.

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New step towards cryptocurrency data exchange

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